Global finance chiefs face more challenging China questions at the Hong Kong summit. Amid geopolitical tensions and China’s economic downturn, international investment bank and asset management bosses are getting back together in Hong Kong next week to reposition themselves in the second-largest economy in the world and its offshore financial hub.

The Hong Kong Monetary Authority is hosting the Global Financial Leaders Investment Summit, a premier event starting Monday. Among the attendees are David Solomon, the chief executive of Goldman Sachs (GS.N.), James Gorman, the head of Morgan Stanley (MS.N.), Jane Fraser from Citigroup (C.N.), Noel Quinn from HSBC (HSBA.L.), and Bill Winters from Standard Chartered (STAN.L.).

Speaking at the event, which has “living with complexity” as its central topic, are the leaders of Blackstone Group, Carlyle Group, Citadel, and other organizations.

Executives are arriving in Hong Kong when the city has lost hundreds of jobs in asset management and banking due to a slowdown in Chinese dealmaking and stricter regulations imposed on the industry since the first summit last year. The purpose of the gathering was to announce Hong Kong’s return as a significant international financial center after the COVID-19 pandemic’s interruptions.

“The primary concern of visitors to Hong Kong is the state of the Chinese economy and the potential fluctuations that may arise,” stated Diana Parusheva-Lowery, who oversees sustainable finance and public policy at the Asia Securities Industry & Financial Markets Association in Hong Kong.

With just $2.7 billion raised in the third quarter, the Hong Kong Stock Exchange is the 11th largest venue for initial public offerings this year—a far cry from its top spot for most of the previous ten years. According to official figures, the territory’s assets under administration decreased by 14% in 2022.

As international investors lessen their exposure to China, which they perceive as becoming more isolated due to its opaque rules, faltering real estate market, and crackdowns on private industry, trading volumes have also plummeted.

“Nothing has really changed,” stated Chris Beddor, deputy China research director at Gavekal Dragonomics, who is based in Hong Kong. “The structural slowdown in China’s economy, the omnipresent risk that U.S.-China relations might take another leg down in the future, the questions about whether private mainland money now prefers Singapore, all of that.”

“And senior people in the financial sector are keenly aware of those issues, even if they don’t discuss them publicly,” Beddor stated.

A LINE OF REDUCTIONS

According to recruiters and industry insiders, Hong Kong’s financial employment market—which experienced a flight of foreign workers during COVID—is unlikely to rebound anytime soon due to a challenging operating climate.

This year, Goldman Sachs, Morgan Stanley, and J.P. Morgan have reduced the number of bankers on staff in Hong Kong and the Chinese mainland. Notably, among those let go are influential China dealmakers.

In August, Credit Suisse’s investment banking personnel in Hong Kong were brutally reduced by 80% due to the unexpected merger between rival Swiss banks UBS and Credit Suisse.

CPP Investments, the biggest pension fund in Canada, also let go of several employees stationed in Hong Kong. Recruiting in private banking is still going strong, according to John Mullally, managing director of Robert Walters’ Hong Kong office. This is because wealth is still flowing into Hong Kong from China following the border’s reopening.

Mullally believes that despite the downturn in dealmaking and trade, Hong Kong will “regain some of the ground lost” and that Hong Kong must be mindful of competition from rival financial powerhouse Singapore.